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(Micro Economics) Assume someone has a utility function of U = square root(M) where M is...

(Micro Economics)

Assume someone has a utility function of U = square root(M) where M is income equal to $1500.

The following bet is offered to the person: 0.67(100) + 0.33(-100).

What is the expected value of the bet? Will the person accept the bet (do the calculations)?

Now suppose the bet is 0.75(100) + 0.25(-300).

What is the expected value of the bet now? Will the person accept this bet? Why?

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